The internal audit activity’s audit plan is based on all of the following except

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• Board Policy Manual
• Annual Audit
• Audit Requirements and Procedures
• Financial Accountability System Resource Guide
• Filing of Report
• Internet Posting of Audit
• Financial Records
• Financial Accountability Rating System (School FIRST)
• Issuance of Ratings
• Mission and Principles
• Organization
• Professional Standards
• Independence and Objectivity
• Responsibility
• Internal Audit Plan
• Reporting and Monitoring
• Resolution of Disputes
• Quality Assurance and Improvement Program
• What are the 4 stages of an internal audit?
• What are the 3 types of internal audits?
• What all is covered in internal audit plan?
• What are the main activities of an internal audit?

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Board Policy Manual

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Section A — Basic District Foundations

Section B — Local Governance

Section C — Business and Support Services

Section G — Community and Governmental Relations

• Legal
• Local
• Regulation
• Exhibit
• Links

• Legal Framework
• Local Policy
• Regulation
• Exhibit
• Related Links

Download Legal Framework:

• Annual Audit
• Audit Requirements and Procedures
• Independent Auditor
• Financial Accountability System Resource Guide
• Filing of Report
• Internet Posting of Audit
• Financial Records
• Financial Accountability Rating System (School FIRST)
• Issuance of Ratings
• Appeals

Annual Audit

The board shall have its district fiscal accounts audited annually at district expense by a certified or public accountant holding a permit from the State Board of Public Accountancy. The audit must be completed following the close of each fiscal year.

The independent audit must meet at least the minimum requirements and be in the format prescribed by the State Board of Education (SBOE), subject to review and comment by the state auditor. The audit shall include an audit of the accuracy of the fiscal information provided by the district through the Public Education Information Management System (PEIMS).

Education Code 44.008(a), (b)

Audit Requirements and Procedures

A district must file with the Texas Education Agency (TEA) an annual financial and compliance report and, if applicable, a state compensatory agreed-upon procedures report. These reports must be audited by an independent auditor, and the audit must be reviewed by TEA, including review of auditors' working papers, in accordance with the Financial Accountability System Resource Guide, as adopted by reference in 19 Administrative Code 109.41.

The annual financial audit report and state compensatory agreed-upon procedures report are due 150 days after the end of the fiscal year.

Independent Auditor

The district must hire at its own expense an independent auditor to conduct an independent audit of its financial statements and provide an opinion on its annual financial and compliance report.

The independent auditor must:

1. Be associated with a certified public accountancy (CPA) firm that has a current valid license issued by the Texas State Board of Public Accountancy or a state licensing agency from another state;
2. Be a certified public accountant with a current valid license issued by the Texas State Board of Public Accountancy, as required under Education Code 44.008; and
3. Adhere to the generally accepted auditing standards (GAAS), adopted by the American Institute of CPAs (AICPA), as amended, and the generally accepted government auditing standards (GAGAS), adopted by the U.S. Government Accountability Office, as amended.

The CPA firm must:

1. Be a member of the AICPA Governmental Audit Quality Center (GAQC);
2. Adhere to GAQC's membership requirements; and
3. Collectively have the knowledge, skills, and experience to be competent for the audit being conducted, including thorough knowledge of the government auditing requirements and:
   1. Texas public school district environment;
   2. Public sector; or
   3. Nonprofit sector.

If at any time the TEA division responsible for financial compliance reviews an audit firm's working papers and finds that the firm or the quality of the work does not meet the required standards, the division may require the district to change its audit firm.

19 TAC 109.23

Financial Accountability System Resource Guide

The rules for financial accounting are described in the official TEA publication Financial Accountability System Resource Guide, dated June 2021, which is adopted by reference as TEA's official rule. A copy is available on the TEA website with information related to financial compliance. 19 TAC 109.41, .5001

Filing of Report

A copy of the annual audit report, approved by the board, shall be filed with TEA not later than the 150th day after the end of the fiscal year for which the audit was made. If a board declines or refuses to approve its auditor's report, it shall nevertheless file with TEA a copy of the audit report with its statement detailing reasons for failure to approve the report. Education Code 44.008(d)

Internet Posting of Audit

Each district shall maintain an internet website or have access to a generally accessible internet website that may be used for the purposes of this provision. Each district shall post or cause to be posted on the internet website the information required by Tax Code 26.18, including the district's most recent financial audit, in a format prescribed by the comptroller. Tax Code 26.18 [See CE for other required information that must be posted.]

Note: For information on the efficiency audit required before a district may hold an election to seek voter approval to adopt a maintenance and operations tax rate, see CCG.

Financial Records

Each treasurer receiving or having control of any school fund of any district shall keep a full and separate itemized account with each of the different classes of its school funds coming into the treasurer's hands. The treasurer's records of the district's itemized accounts and records shall be available to audit. Education Code 44.008(c)

Financial Accountability Rating System (School FIRST)

TEA will assign a financial accountability rating to each district as required by Education Code 39.082.

TEA will base the financial accountability rating of a district on its overall performance on the financial measurements, ratios, and other indicators established by the commissioner. Financial accountability ratings for a rating year are based on the data from the immediate prior fiscal year.

A financial accountability rating remains in effect until replaced by a subsequent rating.

19 TAC 109.1001(b), (e), (l)

Issuance of Ratings

TEA will issue a preliminary financial accountability rating to a district on or before August 8 of each year. TEA will not delay the issuance of a preliminary or final rating if a district fails to meet the statutory deadline under Education Code 44.008 for submitting the annual financial report (AFR). Instead, the district will receive an F rating for substandard achievement.

Appeals

A district may appeal its preliminary financial accountability rating through the appeals process described at 19 Administrative Code 109.1001(n).

If TEA receives an appeal of a preliminary rating, TEA will issue a final rating to the district no later than 60 days after the deadline for submitting appeals. If TEA does not receive an appeal of a preliminary rating, the preliminary rating automatically becomes a final rating 31 days after issuance of the preliminary rating.

A final rating issued by TEA may not be appealed under Education Code 7.057 or any other law or rule.

19 TAC 109.1001(m)–(o)

[For information on the reporting requirements regarding a district's financial accountability rating, see CFA.]

FRISCO ISD

CFC(LEGAL)-P

UPDATE 118

DATE ISSUED: 11/1/2021

• Purpose
• Mission and Principles
• Organization
• Professional Standards
• Authority
• Independence and Objectivity
• Responsibility
• Internal Audit Plan
• Reporting and Monitoring
• Resolution of Disputes
• Quality Assurance and Improvement Program

Purpose

The District shall maintain a comprehensive program of internal auditing. Internal auditing is an independent and objective assurance and consulting activity that is guided by a philosophy of adding value to improve the operations of the District. It assists the District in accomplishing its objectives by bringing a systematic and disciplined approach to evaluate and improve the effectiveness of the organization's governance, risk management, and internal control.

Mission and Principles

The mission of the District's Internal Audit department is to enhance and protect organizational value by providing risk-based and objective assurance, advice, and insight.

Core principles for the professional practice of internal auditing include the following:

• Demonstrates integrity;
• Demonstrates competence and due professional care;
• Is objective and free from undue influence (independent);
• Aligns with the strategies, objectives, and risks of the organization;
• Is appropriately positioned and adequately resourced;
• Demonstrates quality and continuous improvement;
• Communicates effectively;
• Provides risk-based assurance;
• Is insightful, proactive, and future-based; and
• Promotes organizational improvement.

Organization

In accordance with law, the director of Internal Audit shall report directly to the Board. The director of Internal Audit shall report administratively (for day-to-day operations) to the Superintendent.

The Board shall:

1. Approve the Internal Audit charter, the risk-based Internal Audit plan, the Internal Audit budget, and the resource plan;
2. Receive periodic communications from the director of Internal Audit on the performance of Internal Audit relative to the established plan and other matters;
3. Evaluate the performance of the director of Internal Audit;
4. Approve decisions regarding the appointment and removal of the director of Internal Audit;
5. Approve the remuneration of the director of Internal Audit; and
6. Make appropriate inquiries of the Superintendent or designee and the director of Internal Audit to determine whether there is appropriate scope or any resource limitations.

The director of Internal Audit shall communicate directly with the Board, including in open session (or executive session when authorized under the Texas Open Meetings Act) and between Board meetings, as necessary.

An individual Board member shall have no individual authority to direct audits. There shall be an audit committee composed of three members of the Board. Audit selection shall be based on the annual risk-based Internal Audit plan as reviewed by the audit committee and approved by the Board.

For purposes of this policy, "report administratively" means the Superintendent provides appropriate structure for the internal audit function within the District, which includes, but is not limited to:

1. Budget, accounting, procurement, and information technology support;
2. Human resource administration, including support in hiring personnel and providing compensation;
3. Communication with the internal auditor concerning Internal Audit activities;
4. Adequate workspace, furniture, and equipment;
5. Administration of the District's policies and procedures, to include enforcement of time and attendance, travel, and purchasing requirements; and
6. Recommendations regarding the appointment or removal of the director of Internal Audit.

Professional Standards

All members of the Internal Audit department shall adhere to the Institute of Internal Auditors' Definition of Internal Auditing, the Code of Ethics, and the International Standards for the Professional Practices of Internal Auditing.

All members of Internal Audit shall also adhere to the institute of Internal Auditors' Practice Advisories, practice guides, and position papers as applicable to guide operations. In addition, Internal Audit shall adhere to the District's relevant policies and procedures and the department's standard operating procedures manual.

Authority

Internal Audit shall maintain strict accountability for confidentiality and safeguard all records and District information. The department shall be granted full, free, and unrestricted access to any and all District records, physical properties, and personnel pertinent to carrying out any engagement. All District employees shall cooperate with and assist Internal Audit in fulfilling its responsibilities. The department shall also have full, free, and unrestricted access to the Board, audit committee, and Superintendent.

Independence and Objectivity

All Internal Audit activities shall remain free of influence by any element in the District, including matters of audit selection, scope procedures, frequency, timing, or report content to permit maintenance of an independent and objective mental attitude.

Internal auditors shall have no direct operational responsibility or authority over any of the activities audited. Accordingly, they shall not implement internal controls, develop procedures, install systems, prepare records, or engage in any other activity that may impair the internal auditor's judgment.

Internal auditors shall exhibit the highest level of professional objectivity in gathering, evaluating, and communicating information above the activity or process being examined.

The organizational independence of Internal Audit shall be confirmed annually to the Board by the director of Internal Audit.

Responsibility

The scope of an internal audit shall encompass, but is not limited to, the examination and evaluation of the adequacy and effectiveness of the District's governance, risk management, and internal controls, as well as the quality of performance in carrying out assigned responsibilities to achieve the District's stated goals and objectives, including:

1. Evaluating risk exposure relating to achievement of the organization's strategic objectives;
2. Evaluating the reliability and integrity of information and the means used to identify, measure, classify, and report such information;
3. Evaluating the systems established to ensure compliance with those policies, plans, procedures, laws, and regulations that could have an impact on the District;
4. Evaluating the means of safeguarding assets and verifying the existence of such assets;
5. Evaluating the effectiveness and efficiency with which resources are employed;
6. Evaluating operations or programs to ascertain whether results are consistent with established objectives and goals, and whether the operations or programs are being carried out as planned;
7. Evaluating governance processes;
8. Evaluating specific operations at the request of the Board or the District administration, subject to review by the audit committee and approval by the Board;
9. Evaluating the effectiveness of the District's risk management processes;
10. Performing consulting and advisory services related to governance, risk management, and control, as appropriate for the District, subject to review by the audit committee and approval by the Board;
11. Reporting periodically on the Internal Audit department's purpose, authority, responsibility, and performance relative to its plan; and
12. Reporting significant risk exposures and control issues, including fraud risks, governance risks, and other matters needed or requested by the Board.

Internal Audit Plan

At least annually, the director of Internal Audit shall submit to the Board, audit committee, and Superintendent an Internal Audit plan for review, for final approval by the Board. The director shall communicate the impact of resource limitations and significant interim changes to the Board, audit committee, and Superintendent.

The Internal Audit plan shall be developed based on a prioritization of the audit universe using a risk-based methodology, including input of the Board, audit committee, and Superintendent or designee. The director of Internal Audit shall review and adjust the plan, as necessary, in response to changes in the organization's business, risks, operations, programs, systems, and controls. Any significant deviation from the approved Internal Audit plan shall be communicated to the Board, audit committee, and Superintendent.

Reporting and Monitoring

A written report shall be prepared and issued by the director of Internal Audit following the conclusion of each audit and shall include the Superintendent or designee's response in regard to the specific audit results and recommendations. The report shall be distributed as appropriate to the Board, audit committee, Superintendent, and District administrators.

The Internal Audit department shall be responsible for appropriate follow-up on engagement audit results and recommendations. All significant findings shall remain in an open-issues file until cleared.

The director of Internal Audit shall periodically report to senior management and the Board on Internal Audit activity's purpose, authority, and responsibility, as well as performance relative to its plan. Reporting shall also include significant risk exposures and control issues, including fraud risks, governance issues, and other matters needed or requested by the Board, audit committee, or Superintendent or designee. Public dissemination of any written reports, as well as responses to public information requests for information by the Internal Audit department, shall be coordinated by and between the Internal Audit department, the District's communications department, and the Superintendent, except as otherwise required by law. Internal Audit shall comply with records retention requirements provided under state law.

Deliverables for consulting engagements shall be defined as a part of the consulting engagement. Consulting engagement deliverables distribution shall follow the same reporting process as audit engagements. Investigations regarding allegations of fraud, unethical behavior, or illegal behavior shall be reported to the Board, audit committee, and Superintendent. [See CAA]

Resolution of Disputes

The Internal Audit department shall make all attempts to resolve at the lowest level any disputes regarding specific audit results or recommendation disagreements. In the event the Internal Audit staff cannot resolve the dispute, the matter shall be referred to the Superintendent for resolution. In the event the dispute is not satisfactorily resolved or involves the Superintendent, the dispute shall be referred to the audit committee, or the Board if appropriate, for resolution.

Quality Assurance and Improvement Program

Internal Audit activity shall maintain a quality assurance and improvement program that covers all aspects of Internal Audit activity. The program shall include an evaluation of Internal Audit activity's conformance with the definition of internal auditing and the standards and an evaluation of whether internal auditors apply the established code of ethics. The program shall also assess the efficiency and effectiveness of the Internal Audit department and identify opportunities for improvement.

The director of Internal Audit shall communicate to the Board, audit committee, and Superintendent or designee on the quality assurance and improvement program, including results of ongoing internal assessments and external assessments conducted at least every five years.

FRISCO ISD

CFC(LOCAL)-X

LDU 2017.05

DATE ISSUED: 12/21/2017

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What are the 4 stages of an internal audit?

What are the 3 types of internal audits?

What all is covered in internal audit plan?

What are the main activities of an internal audit?